SubQuery Tokenomics 2.0: A Letter on Sustainability, Maturity, and What Comes Next

From Ian He, CTO & Co-Founder of SubQuery

When SubQuery first launched, inflation was a conscious choice.

Like many early-stage networks, we needed a mechanism that could rapidly bootstrap participation, attract Node Operators, and incentivise the behaviours required to bring the network to life. At that stage, inflation wasn’t a flaw, it was a tool. A necessary one.

But networks, like products, must evolve. And over time, it became clear that the same mechanism that helped SubQuery grow was no longer serving its long-term health.

Under our current model, SubQuery operates with a 1% annual inflation rate. Compounded, this results in more than 100 million new SQT tokens being minted every year. A significant portion of this inflation (about 70%) remains undistributed, creating silent dilution for token holders without corresponding increases in real economic activity. More importantly, rewards have become increasingly disconnected from actual network usage and value creation.

It was not the foundation of a sustainable economy.

Why We’re Changing

We launched mainnet in February 2024, we’re almost 2 years on and SubQuery is no longer a network in its infancy:

• Total Eras: 94
• Historical uptime: 99.98%
• Total queries served: 18,895,840,356
• Total rewards distributed: 70,377,101 SQT

We are operating real infrastructure, supporting real workloads, and generating real usage across ecosystems. Tokenomics should reflect that reality.

SMP-4, our Tokenomics 2.0 proposal, represents a decisive shift away from growth-through-printing and towards growth-through-utility. At its core, the proposal is about aligning incentives with reality and building an economic model that rewards contribution, not dilution.

The objectives are simple and deliberate:

• Eliminate token inflation entirely
• Fix the total supply of SQT
• Increase true community ownership
• Strengthen long-term value accrual
• Absorb network usage risks via the foundation

This is not a cosmetic change, it’s a structural maturation of the SubQuery network.

What Tokenomics 2.0 Changes

1. Zero Inflation, Immediately

Under Tokenomics 2.0, network inflation will be reduced to 0%.

Token minting will be permanently disabled, fixing total supply at 10.2 billion SQT. No more printing. No inflationary pressure undermining the long-term incentive alignment of the ecosystem.

This marks a fundamental change in how value is created and preserved within SubQuery.

2. From Inflation to Revenue-Backed Rewards

Rewards will transition from being sourced through token emissions to being funded through actual network economics.

This occurs in three phases:

• Phase 1: Foundation-backed rewards Existing Foundation reserves will be used to fund rewards, using already-circulating tokens rather than newly minted supply.
• Phase 2: Hybrid transition Gradual integration of protocol revenue from fees, premium services, and enterprise tiers alongside Foundation support.
• Phase 3: Fully revenue-backed model Operator rewards are sustained primarily through protocol revenue, with Foundation reserves acting as a stabilising buffer.

This transition ensures continuity of rewards while moving the network toward a self-sustaining economy grounded in real demand.

3. Increasing Community Ownership

As Foundation-held tokens are distributed through rewards rather than retained, the proportion of tokens owned by the broader community naturally increases.

This results in:

• Reduced Foundation dominance over supply
• Greater decentralisation of economic power
• Stronger alignment between network participants and governance outcomes

In practical terms, this means the network becomes more community-owned with each reward cycle.

The Economic Principles Behind This Shift

Tokenomics 2.0 is guided by four core principles:

SustainabilityRewards scale with network usage and adoption, not arbitrary emission schedules.

Value AccrualSQT value becomes directly tied to the success of the SubQuery Network and its revenue-generating activity.

True DecentralisationOwnership and economic power migrate further into the hands of the community.

Market EfficiencyIncentives reward contribution and performance, not token dilution.

This is how long-term networks are built: by aligning economic mechanics with real-world health indicators.

What This Means for the Network

For Node Operators, not much is changed. For token holders, value is no longer eroded by constant supply expansion. For the ecosystem as a whole, incentives become clearer, more rational, and more defensible over time.

This approach also enables stronger long-term mechanisms for value support, including revenue reinvestment and buyback programs that reinforce network stability and token price integrity.

Implementation & Safeguards

This transition will be implemented pragmatically to protect operator stability and avoid reward disruption.

• Token minting will be permanently disabled by setting the Ethereum mainnet SQT contract minter to the zero address.
• Total supply will be locked at 10.2 billion SQT.
• Automated treasury monitoring will ensure that when reward reserves fall below 30 million SQT, Foundation allocations provide continuity.

This ensures the network remains stable throughout the transition while we progressively shift to a fully revenue-backed reward system.

A Network That Has Grown Up

Tokenomics 2.0 is not about removing incentives. It is about making them real.

We are moving from a model designed for bootstrapping to one designed for permanence - where rewards are earned through genuine utility, where ownership reflects participation, and where value grows in step with adoption.

This is what it looks like when a network grows up.

And we believe it is the strongest signal we can send that SubQuery is here not just to scale, but to endure.

Ian He
CTO & Co-Founder, SubQuery